This article was published on Investopedia

Investopedia 2017

Margaret S. faced the ultimate thief. She lost her husband to a sudden cardiac arrest. Only 59 and in seemingly good health, at least he had the foresight to keep a million-dollar life insurance policy on himself, naming her as beneficiary. Referred to us by a friend, Margaret arrived at our first appointment shaken and afraid. Not only was she grieving the loss of her life partner, she now faced a torrent of consequences from this sudden windfall of money.

Read more: Irrevocable Life Insurance Trust: Protect Your Estate

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Margaret S. faced the ultimate thief.

She lost her husband to a sudden cardiac arrest.

Only 59, in seemingly good health, at least he had the foresight to place a million-dollar life insurance policy on himself, naming her as beneficiary. Referred to us by a friend, Margaret arrived at our first appointment shaken and afraid.

Not only was she grieving the loss of her life partner, she now faced a torrent of consequences from this sudden windfall of money.

The IRS demanded its sizable share of the proceeds to cover tax liability.
And creditors demanded the rest to pay off debts she didn’t even know her husband had.

How would she provide for herself and her three children?

I wish I could tell you this situation is uncommon. In fact, it is all too common.

More than half of all Americans do not have a will or an estate plan.
An unbelievable 92 percent of adults under age 35 do not have a will or estate plan.

Sadly, it was too late to help Margaret.

But it is not too late to help you.

The Smart Strategy

I want to introduce you to a powerful device called the Irrevocable Life Insurance Trust, ILIT for short.

Think of an ILIT as a holding device that owns your life insurance policy for you, thus removing it from your estate. Everything you own in your name at death the government includes in your estate for tax purposes.

Like its name, once you set up an ILIT, and place your life insurance policy(ies) in it, you cannot take them back, at least in your own name.

ILITs offer the flexibility you need to name beneficiaries, stipulate the terms by which they receive benefits, and you can choose the trustee you wish to manage this device. It is critical to design the ILIT correctly and to follow all guidelines.

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Solving Estate Problems

We strongly believe in the efficacy of ILITs to wipe away the messy problems that can stain the estate planning effort. Consider these beneficial solutions:

  • Reduces the size of your estate, which reduces tax liability
  • Lower estate tax bill may shrink amount of insurance needed
  • Protects cash value of life insurance policy from creditors
  • Controls circumstances of beneficiaries’ receipt of proceeds
  • Permits stronger protection/ management of proceeds to any beneficiary on government aid

Laws vary from state to state, so it is important to sit down with your attorney and us to determine what best fits your circumstances. We can assist you in:

  • Setting up the ILIT
  • Naming your beneficiaries
  • Identifying the proper trustee
  • Selecting the right life insurance policy
  • Shaping the circumstances for beneficiary receipt of money

Role of the Trustee

A brief word about the role of the trustee. He or she manages your ILIT and will follow your directions. Whatever money you transfer to the ILIT annually, your trustee uses it to pay insurance premiums. Your trustee handles a variety of administrative actions like the annual notification to beneficiaries (the “Crummey Letter”) and files the ILIT’s tax return.

Once we set up your ILIT, we will also help you make an informed choice on the right life insurance policy to place in the device. You may select an individual policy of a second-to-die (survivorship) policy. Remember, you do not pay the premiums directly; the trustee handles that for you.

The Incidentals

There are many smaller decisions to make in drafting your ILIT:

Whether you can use an existing policy; what to do regards gifting and the gift tax exclusion; and if your policy avoids probate, areas we explain in a private meeting.

What do you do if you don’t wish to keep the ILIT in force any longer?

Rest assured, you are not required to continue making premium payments. Your policy may lapse as soon as you miss your annual premium payment, depending on its type. If it is a cash value arrangement, the funds may be used to pay premiums until you exhaust all the accumulated cash.

A final word in this very brief tutorial.

Because you cannot transfer a policy owned by an ILIT into your own name, if you think you ever need to or need to tap the cash value, think carefully. The ILIT may not be a smart strategy for you.

Look forward to discussing an ILIT and other strategies with you in the future.

[Note: Margaret S. is a fictitious character created for purposes of illustration]

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

The Roush Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318







five ways to engage more employees in your 401k plan 2

As employers prepare for open enrollment season, those wanting to boost participation in their 401(k) plans should act now to deploy strategies that work.

Helping more people access retirement planning is a noble cause, especially when you consider 30 percent of eligible employees do not participate in their employer’s 401(k) plan. Sad to say.

Given the many savings and tax advantages of these plans, one would expect 100 percent participation.

What’s the problem?
Better yet, what’s the solution?

Well, the answer to the first question is bit complex. And it involves the expanding field of behavioral finance, too hefty for this quick post.

My goal for this post? Simplify the complex for you and your employees.

That’s why we will not discuss reasons why only ten percent of employers with fewer than 100 employees offer a 401(k) plan, at all. And I will not tackle why eligible employees who do participate don’t save enough. Or why employees need to resist borrowing from their 401(k) plans.

Two reasons drive one-third of workers to shut themselves out of at least some retirement security: 1) The process seems complicated, and 2) humans tend toward short-term thinking.

It’s Complicated

In a useful survey from AARP, more than half of adults said they had made an investment with an adverse outcome because they “didn’t understand” the investment, which negatively affected their appetite for saving into a retirement plan. It turns out the adverse outcome was based on unexpected taxes or a penalty on early withdrawal─easily overcome had these consequences been communicated clearly and early on.

But here’s the rub. Of those surveyed, 54 percent admitted they “don’t read financial literature because it is too hard to understand.”

Paycheck to Paycheck

five ways to engage more employees in your 401k plan

In another study by the Social Security Office of Policy, we learn that short-term goals have a negative impact on participation rates. The study establishes that employees’ planning horizon matters. For example, those who “plan for periods of less than five years are much less likely to provide for their retirement than those who have a longer perspective.”

Do you see what a challenge these realities present for everyone in the retirement planning business? Then, add inertia to the challenge. Given the option to do nothing, most people will do nothing, even if the choice brings good to them.

It is extremely difficult to change someone’s opinion, let alone change their behavior. However, we must try. We have an obligation as good stewards of retirement planning to give employees every conceivable opportunity to retire with dignity.

As an employer offering a 401(k) plan, you took a major step forward in the retirement challenge. Now, let us work with you to help you engage more of your workforce in your plan so they can realize the long-term benefits of the plan you’ve so generously provided.

Here are some simplified strategies you can put into play to help your company experience a successful enrollment season. And keep in mind, we want to minimize fears and misconceptions around 401(k) plans.

Five Ways to Increase Plan Participation

  • Keep it Simple. Be sure to announce and communicate what needs to be done, why and when as simply as possible. Don’t overwhelm your employees with financial jargon, busy charts, too many details or too many choices. Share as much as possible in as few words as possible. Make the message clear, concise and compelling. Appeal to the emotion. Share how the plan protects the employees and their families. Use beneficial imagery.
  • Tailor Your Communication. Employees respond differently to different messages. Where email works for one group, formal written materials may work best for another. Some like the visual reinforcement of seeing posters or flyers in public areas, or postcards to their home. Create multiple communication platforms to get the message across.
  • Implement Auto-enrollment. Even with automatic enrollment, employees still can choose not to join the plan. However, they must proactively opt-out, lessening the possibility of non-participation. And because auto-enrollment typically offers default choices in savings rate and investments, it makes it easier for employees to make a decision, free from a dizzying array of choices. At least, they are saving. Good news. The DOL estimates auto-enrollment alone can slice the number of those not participating in half, from 30 percent down to 15 percent.
  • Partner with Technology. It’s imperative to give your team 24/7 access to plan information. So put it online and make it interactive. Don’t preach. Teach. You can use any number of human capital management systems so employees can make easy adjustments to their plan. Some offer employee personas or profiles where your worker chooses a profile most like them, a type of self-qualification. Then you can match relevant content to their needs.
  • Do Creative Marketing. Face-to-face engagement in the plan offers participation incentives. In this age of digital distances, some folks still enjoy good, old-fashion human contact. Think Focus Groups, Lunch and Learns, and Benefit Fairs. Generate excitement. You can even go virtual with these types of events. Simply get creative and enjoy the journey. Today’s savvy HR departments know how to do these events well. If you don’t have an HR department, talk to us. We can guide you.

I could share 50 more ways to increase your plan participation; this whirlwind post only touches the surface. However, if you do these five things I’ve suggested, you’ll feel a tailwind at your back and head in the right direction.

In the meantime, talk to us about any special challenges you face. And remember, you can always outsource full 401(k) plan design, implementation and administration (including employee education and communication) to a specialty firm, like ours.

Ask us about our innovative DCPro program, which brings together in an exceptional alliance the best of the best plan fiduciaries in the business.

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318

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When I spend time at our lake house, I think a lot.

One afternoon, I sat quietly watching the clouds reflect off ripples moving across the lake. I felt nostalgic. I wanted to pen a note to my daughter, Jessica.

I wanted to tell her how to live life without regret.

I’ve had my own. But I wanted to spare her the regrets so many of us experience when life falls short of its full potential.

Jessica is strong, smart and well into her career. I know she will do well in life. What could become her regrets, I wondered. And could I help her?

Then, I began to think about you─our clients, your families and what regrets you might be shouldering at this moment.

In her book The Top Five Regrets of the Dying, palliative care nurse Bronnie Ware shares the thoughts of her patients as they prepared for their quiet endings.

What matters most at this point?

And why would a financial advisor like me dare to comment on such a sacred subject?

Here is Ms. Ware’s list of the top five regrets (think wishes) of the dying:

  1. I wish I’d had the courage to live a life true to myself, not what others expect of me.
  2. I wish I hadn’t worked so hard.
  3. I wish I’d had the courage to express my feelings.
  4. I wish I had stayed in touch with my friends.
  5. I wish I had let myself be happier.

Do you see yourself in these thoughts? Are they meaningful to you?

Do you notice not one is about money?

Although I am in the business to manage money, grow and preserve wealth, I find myself surrounded by the emotional side of money every day.

The freedom it brings. The responsibility. The stress. The fear of loss.

So I counsel my clients, usually by asking many difficult questions. I need to know you not only on a financial level but on an emotional level, too.

And now I want to learn how my skills at financial advisory can help you live life without regrets.

Most credit Mark Twain with saying: I believe we feel the most regret about missed chances we did not take.

Twenty Years From Now Mark Twain

That’s because our “psychological immune system” allows us to recover from unpleasant experiences more quickly than we think due to our ability to rationalize and reframe how we view things. However, it is harder for this system to kick in when we have never tried something in the first place.

Emotional Side of No Regrets

Let’s talk about the things you can do now to diminish regrets in your life on an emotional level; then we’ll talk about tangible things you can do on a financial level to buffer you from regrets later.

Here’s a personal roundup of seven areas I work on to reduce the potential for regret:

  1. Question assumptions; discover your own path
  2. Trust your gut instincts
  3. Take risks; move outside your comfort zone daily
  4. Learn to love change and the opportunity it brings
  5. Keep your work in perspective; focus on what’s meaningful in your life
  6. Practice forgiveness and kindness with everyone
  7. Tell and show your loved ones you love them as often as you can

Write down what you believe you can do now to leave no regrets.

It is a very personal process, just like financial life planning. Give it a try. It can be liberating.

Financial Side on No Regrets

Now, let’s turn to the practical side of regret-banishing. There are certain financial actions you can take right now to help avoid regret in the last chapter of your life:

  • Prepare Your Will, Living Will or Trust (trusts can limit estate taxes at 40 percent or legal challenges)
  • If You Own a Business, Do Your Succession Plan (protect what you’ve built)
  • If You Hold Assets, Develop Your Estate Plan (protect what you’ve accumulated)
  • Complete a Durable Power of Attorney (to transact business on your behalf)
  • File a Durable Power of Attorney for Healthcare (with your doctor, hospital, family)
  • Do Your Beneficiary Designations (assets may pass to heirs outside of a will)
  • Do Guardianship Designations (critical to the future lives of your children)
  • Write a Letter of Intent (so executor or beneficiary can carry out your wishes)
  • Prepare to Leave a Legacy (it’s our responsibility to leave Earth a better place)

We’re all in this business of life together.
Let’s help each other make the journey shine like the ripples on our lake.

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318

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What do we mean by the Holy Grail? And whose values? Yours or ours?

Regarded as a sacred object, the Holy Grail refers to the cup used by Jesus at the Last Supper; it is believed to possess miraculous powers to “provide happiness, eternal youth or sustenance in infinite abundance.” Whether real and lost to history or only a legend in literature, the quest for the Holy Grail is an apt metaphor for today’s post.

At the very heart of the relationship between advisor and client we find the oft unspoken quest for core values. You want to know your advisor’s core values. He or she wants to know yours. Why?

One word: Trust.

When embarking on a financial life journey together, client and advisor must trust one another. The presence of trust is the only way to remove the fear of risk, so often prevalent in financial decisions.

You meet with an advisor. He asks you to read his Fiduciary Oath. Is that sufficient? What more should you know?

He asks what you value in life and how you wish to express those values through your wealth. Is that sufficient? What more should he know?

In understanding our core values, we try to figure out the nature of our best selves. How to guide our behavior with a strong moral compass. How to treat people, clients, and each other.

While core values require an inward-focused search over time, outside events, pivotal people, and lifelong learning shape them, too. Let me ask a question.

Does a statement of values hung on an office wall or written into a Fiduciary Oath move you?

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Many companies state core values in their public-facing documents: Communication. Respect. Integrity. Excellence. What do these words mean? They meant nothing to Enron in whose 2000 annual report they were printed.

Or are core values the embodiment of how we behave each day? How employees behave? What we do in a crisis? What we do in private and in public.

Core values, like the Holy Grail, are to be revered, protected and woven into life’s moments of truth.

For us, core values are critical to long-term growth and our business value. But they are not one dimensional. They matter because they build bonds of trust. With you and your family.

I worry about the financial services industry. Too many examples of rudderless, rogue advisors or ravenous banks have commanded headlines since 2008. Remember the '80s savings and loan crisis?

But we can and will stand apart. By following your core values. And our own.

Your Core Values First

As a client of Roush Investment Group, either on the wealth management or 401(k) plan side, you took a leap of faith that we would deliver on our promise. I’ll share a quote by Roy Disney: “It is not hard to make decisions when you know what your values are.”

You knew. And decided to join us. I hope not before we fully understood you as a person. Because deep understanding of our clients underscores our business purpose. Your unique beliefs, attitudes and behaviors matter to us.

Instead of asking you questions from a pro forma questionnaire, we try to ask the question behind the question.

  • What’s your WHY?
  • What are your values and are you being true to them?
  • Do you do the things you know you should?
  • Are your “shoulds” blocking your happiness?
  • If you achieved all your life’s goals, how would you feel? What would it look like?
  • If we could wave a magic wand and do anything together, what would you want to happen?

These are but a few of hundreds of questions that go to the source of your core values. Your answers help us to hear you, see you and understand you.

Something we all want. To be heard, seen and understood. Don’t misunderstand. We are not psychologists. By any stretch. We deal with these questions because money can exercise power over the human mind. And money, especially wealth, can affect your core values.

Think for a moment about your core values. Here’s a short, random list some of the values our clients might share with us. Do you recognize any of your core values?

  • Hard work or work/life balance
  • Achievement and helping others achieve
  • Wealth and shared prosperity
  • Lifelong learning, education and knowledge
  • Self-awareness and personal growth
  • Financial independence, safety and security
  • Longevity with vitality of health
  • Serenity, simplicity, peace of mind
  • Dignity, ethics and truth
  • Significance, power and esteem
  • Philanthropy, shared prosperity and citizenship
  • Duty, responsibility, honor
  • Compassion, goodwill and gratitude
  • Experience, expertise, creativity
  • Fairness, justice and trust
  • Family, friendship, relationships

You’ll notice one value concept missing: Happiness.

Most clients value happiness and tell us wealth brings happiness, brings meaning.

The late Joseph Campbell, an extraordinary writer and lecturer on the human experience, saw life this way:

Fotolia 82755314 XS 2“People say that what we’re all seeking is a meaning for life. I don’t think that’s what we’re really seeking. I think that what we’re seeking is an experience of being alive.”


An experience of being fully alive.

With your core values to guide you on the journey.

It’s nothing less than perfect in a less than perfect world.

So how does the Roush team express its core values. Allow me:

1. In how we hire:

    Character before talent. We can train for talent. Passion, accountability and ethics come from deep within. We own what we do. And when we hire correctly, we transfer the benefits of our core values to you.

2. In how we behave:

    Professionalism without compromise. When we’re guided by core values, we can change behavior in ourselves and others for the good. And we can make a difference in the lives of clients and their families.

3. In how we manage our firm:

    Open to new ideas and challenges. Keeping it real and honest. Willing to accept the pain that living one’s values can create. Doing the right thing. Fostering teamwork and community service. Pumping the heart of our culture with our core values.

4. In how we treat our clients:

    With regard, respect and collaboration. As intelligent, accomplished people who always deserve our best thinking, ideas, solutions and attention. As members of our family who wish a bit of help to realize their vision.

Well, I’ve been a little philosophical in this post. Thank you for indulging me. My takeaway message?

Whomever you choose to advise you financially, anchor the relationship with shared core values.

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318


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A clarion call went out to ERISA fiduciaries on June 9 when new fiduciary rule went into effect.

The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be available when they retire. The IRS, Department of Labor, and ERISA regulate various compliance aspects of plans.

50 Million People Affected

The fiduciary rule affects over half of the country’s working population. Participation in 401(k) plans continues to grow with more than 50 million workers actively participating in more than 500,000 different company plans.  The Investment Company Institute reports Americans hold nearly five trillion dollars in assets in 401(k) plans at the end of 2016.

The compliance stakes are high.

A look back at 2013 alone shows the DOL collected from plan sponsors $1.69 billion in fines, voluntary fiduciary corrections, and informal complaint resolutions, which represents 33 percent increase over the previous year.

Ignorance of the Law No Excuse

Many employers (plan sponsors) offering 401(k) plans do not realize they are personally liable for any compliance breach of their retirement plans. They may not even understand their fiduciary responsibilities because they assume service providers take care of this “administrative” detail.

That is a dangerous misconception.

Smaller plans with less than $50 million in assets face greater vulnerability because they may not understand the need for or role of designated fiduciaries. Unlike larger plans, smaller plans may not have in place elaborate compliance safety nets which protect larger plans. However, “ignorance of the law excuses no one” as the legal principle warns.

Most Common Breaches

Arguably, there are half a dozen or more common compliance issues over which employers stumble:

  • Failure to understand eligibility requirements and enrollment timing
  • Late transfer of paycheck withholdings to custodian accounts
  • Absence of a plan committee to oversee performance and investment options
  • Failure to follow the plan’s definition of eligible compensation
  • Improper vesting of terminated participants and use of forfeited amounts
  • Improper distributions to participants

Now, with the new fiduciary rule, employers not only have to worry about getting stuck in the weeds above, but they must also watch over the entire landscape.

In our last post, we discussed the new fiduciary rule and its requirement for advisors to act in the “best interest of clients.” This lifts the bar on the lower standard suitability followed by broker-dealers with the “potential for conflicted advice offerings” because they receive commissions on certain investment products.

Two Essential Questions

“Plan sponsors, in their capacity as fiduciaries, should know whether or not their advisors are fiduciaries and whether they have any conflicts of interest,” says Fred Reish, known as the industry’s go-to ERISA expert.

“If I were on a plan committee, I would ask the adviser for a written answer to those two questions,” he urges.

Remember, many broker plan providers still operate under the suitability standard, which does not protect you from plan liability. You must step up.

Is anyone reviewing plan communications to ensure compliance with the fiduciary rule? Are your plan providers recommending specific IRAs or investments to plan participants in their rollover actions? Both potential landmines.

What to Do Next

First, it is important plan sponsors review all relationships with investment advisors for their fiduciary status. If unclear, your litmus test is to secure a fiduciary pledge of assurance that they accept full investment responsibility for the plan.

Even so, as plan sponsor, you are still required to monitor their actions to ensure everything that could be done is being done in the best interest of the plan and your participants.

And, until January 1, 2018, you are in a bit of a twilight zone. That’s because one accountability part of the new fiduciary rule, called the Best Interest Contract Exemption (BICE), won’t be enforced until then. BICE permits employers to continue working with brokers who collect commissions if the broker agrees to act in a fiduciary capacity and disclose all forms of compensation.

Until then, the playing field remains gray as legal interpretation of key wording continues. Apparently, the new DOL fiduciary rule covers 1,000 pages.

Your best path is to undergo a fiduciary assessment now to know where you stand, what plan areas may be vulnerable, then act to avert possible hefty fines or burdensome litigation.

No doubt Fidelity, American Century, Franklin Templeton, Allianz, New York Life, and Cetera, to name a few in the financial sector alone, wish that had occurred before class-action suits made their way to the courts over their roles as plan sponsors.

Self-Correct with a Fiduciary Assessment

As a registered investment advisor and 3(21) fiduciary, Roush Investment Group invites you to consider a full fiduciary assessment of your 401(k) plan to ensure it is compliant and penalty-free. Some of the key areas we analyze during this process include:

  • Overall plan governance
  • Fee structure
  • Plan documentation
  • Investment policy and management
  • Overall plan compliance
  • Participant communication
  • Annual plan review and reporting

Armed with this information and corrective recommendations, you will be able to self-correct and bring your plan up to date with new DOL and IRS requirements.

You cannot put a price on peace of mind.

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318



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On June 9, a quiet storm blew over the financial services industry.

Compliance with the long-awaited Department of Labor (DOL) fiduciary rule became a reality.

Now firms must comply with the fiduciary definition along with provisions on conflicts of interest and impartial conduct. Written disclosures requirements kick in Jan. 1, 2018.

What does this watershed moment mean to the industry?

Some observers expect the DOL to try to “overturn or modify the current rule.” Others predict that in “three to five years all advisors will be fiduciaries for both retirement and nonretirement accounts.”

Under pressure from both the rule and clients, many brokers, broker-dealer firms and wirehouses will scramble to shift from the “suitability standard” to the higher fiduciary standard of care, requiring advisors act in clients’ best interest.

Best Interest vs. Suitability

This excerpt from a recent Forbes Magazine article explains the difference with a familiar car purchase analogy:

“Under the suitability standard, the dealer could say, “A Ford Explorer would meet all of your needs and we have some of those right over here.”  The dealer makes the sale and gets the commission.  You have a car that is suitable for your needs, but it isn’t necessarily what’s best for you.  Since you don’t have a great deal of knowledge about the auto market, you are in the dark.

Under the fiduciary standard, the dealer would be obligated to say, “It sounds like you are describing a Toyota Highlander.  We don’t sell those.  In order to get exactly what you described, you would have to go down the street to Toyota and ask for a Highlander.  I can sell you a similar model called a Ford Explorer, it’s more expensive and it isn’t exactly what you described.”  In this scenario, you have more information about your options and the conflicts driving the dealer.

The Ford dealer has a clear conflict of interest in this situation.  He can only sell Fords and will lose the opportunity to earn a commission if the client buys a Toyota Highlander.  Under the suitability standard, the client ends up with a product (Ford Explorer) that isn’t the best fit given their situation and it costs more than the better-fitting product (Toyota Highlander).  Worst of all, the client probably has no idea that they weren’t given advice that put their own interests first.”


Fotolia 159439174 XS And so it is, the difference between brokers (registered representatives) and RIAs (registered investment advisors) as explained in our last blog on why you must know the difference between RIAs and brokers
Roush Investment Group opened its doors in 2010 as a 3(21) fiduciary; we’ve practiced in the sole interest of our clients from day one. As far as we’re concerned, the rest of the industry has arrived unfashionably late to the party.

Costly Move to Change

The shift to a fiduciary standard of care is not for the faint of heart. A 2016 study by A.T. Kearney forecasts the industry will sacrifice $20 billion in lost revenue through 2020, as more informed clients want to do business with fiduciaries. In fact, it is expected up to $2 trillion in assets will shift among different firms.

Fotolia 110873247 XSBut here’s the rub. The rule is not a mandate. “By and large, absent a government mandate, you’ll find firms holding strong and trying not to deliver advice under a fiduciary standard,” predicts Brian Hamburger, president and CEO of MarketCounsel, a business and regulatory consulting firm for investment advisors.

In an interview with Barron’s, Hamburger shared his belief that most firms will stick to the status quo unless forced to change because the old ways are more profitable.

And the only force that can force a change is the Securities and Exchange Commission (SEC), which holds power to create a uniform regulatory standard governing the behavior of all brokers and investment advisors. One can speculate such a standard is the only way “we’re going to see the best investor protection possible,” says Charles Goldman, CEO of AssetMark.

Objectively, the new fiduciary rule may not automatically guarantee the full protection clients seek. First, the DOL “continues to look at the rule’s wording and aren’t promising they won’t change it. In fact, this is one of the reasons they used to justify any enforcement until the start of next year,” explains Chris Carosa on Second, pundits agree the rule has loopholes, which could lead to abuses.

More important, what does all this mean to you as a Roush client or prospect?

In my opinion, you still need to rely on your instincts about who is and who is not a “trusted advisor.” He or she may operate as a fiduciary. But what if they fall short in integrity, expertise, critical thinking, authenticity, insight or caring? No rule can compensate for these deficiencies.

Rest easy. You, your family, your business, and accounts are carefully wrapped in the best protection possible. We have always operated in your sole interest under the fiduciary standard of care.

Remember, I once came from the other side. When we launched our firm, I knew what to do to build a wall of protection around my clients because I’ve witnessed firsthand the consequences of working with people driven only by the profit motive. Pushing proprietary products. Hidden fees and commissions. Risky investments. These are nowhere in our DNA.

For business owners (plan sponsors) offering 401(k) plans through us, you, too, are fiduciaries.

In our next post, we’ll talk about what you need to do to ensure you remain in compliance.

Better yet, this may be the ideal time to consider a compliance audit on your retirement plan.

Don’t risk hefty fines and litigation. We’re here to protect you.

To Your Financial Freedom,

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318

Why You Must Know the Difference Between Brokers and RIAs

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An ominous gray cloud continues to form overhead.

Before you get caught in a storm burst, we want you to know how to protect yourself.

In the next few paragraphs, I’ll define some valuable terms:

  • RIA vs. hybrid broker.
  • Best interests vs. suitability.
  • Fee-only vs. fee-based vs. commission.

Allow me first to explain the various (confusing) business models or channels by which our industry operates. Sophisticated investors, please excuse the 101 lesson. For others, knowledge is power.

Financial Advisor Channels

Our industry overcomplicates itself with definitions. Many models exist: Retail banks; Wirehouses (full-service brokerages) like Bank of America’s Merrill Lynch, Morgan Stanley Smith Barney, UBS and Wells Fargo; Regional firms like Raymond James or Ameriprise Financial. Boutiques like Credit Suisse; Discount brokerages like Scott Trade; Multi-family offices for intergenerational wealth.

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I want to focus on two key channels. First, Broker-Dealers (B-Ds). BD “advisors” are independent contractors and do business under their firm name or a larger BD, like LPL for back-office support.

Regulated by FINRA, the Financial Industry Regulatory Authority, B-Ds comprise members from the industry who, in effect, self-regulate. Banks own many broker-dealers, and they follow the “suitability” standard─investments made on behalf of a client must be suitable for the client at the time purchased. Further, they are fee-based, not fee-only, which means they can charge clients a fee to develop a financial plan, then charge more fees (or commissions) to implement the plan.

Registered Investment Advisors (RIAs). The RIA model came about after the Great Depression ended in 1939, presumably as a protective reaction to massive investor losses. RIAs hold a “fiduciary duty” to clients, which means they are legally obligated to always act in the “best interest” of clients, a major differentiator from B-Ds.

Under a fiduciary standard of care, your RIA must ensure the appropriateness of any risky investment under all circumstances. The Securities and Exchange Commission (SEC) or state regulatory bodies regulate RIAs under the 1940 Investment Advisors Act.

True RIAs are fee-only advisors, another major differentiator, and do not accept any fees or compensation based on product sales, which means no inherent conflicts of interest. Clients agree in advance to a fee tied to the value of the assets for management of the account, the only fee charged. No trailing commissions on mutual funds. No hidden fees on anything. Full stop.

While I admit to bias, RIAs provide more comprehensive advice, in part, because they are duty bound to clients to show transparency, impartiality, and full-disclosure of fees. Always know the compensation mechanism of your advisor.

Roush Investment Group operates as a RIA, working in your sole and best interest. RIAs give up their Series 7 securities licenses. If we fail our fiduciary duty, we can go to prison. No other business model in the industry─except the RIA─follows the higher fiduciary standard of care, signs an oath to adhere it, and faces criminal charges if it fails to meet the standard.

Enter the Grey Clouds

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Another channel has emerged in recent years: Hybrid Advisor. And here is where it gets complicated for clients. Dually registered with FINRA and the SEC, hybrids have the option to take any business, whether fee-based or commissioned, even with the same client. Yes, you have a choice on how to be charged. And, yes, you can access many products or services from a variety of firms.

But you may never know when the hybrid decides to push a “suitable” product to you for higher commission or decides instead to offer you fee-based advice because they:

  • hold a Series 7 (securities license) with their broker-dealer
  • must meet annual commission quotas by selling an amount of IBD registered shelf product
  • often work for fee-only, but conflict arises from products used in a fee-based structure
  • may even lead with RIA role; however, waters muddy quickly, and you may not know
  • face only fines and termination for bad behavior; RIAs face jail

Broker-dealers may state they support the fee side of the business; a hollow declaration because they stand to earn substantially more money if their reps sell commission products. At your expense.

Given a choice between making more money and doing the right thing? After all, there’s a reason why greed is one of the seven deadly sins.

What’s more, broker-dealers owned by banks do not want the liability exposure of a fiduciary standard of care. Suitability works fine for them. However, clients realize no benefit. In fact, the entire hybrid structure does not benefit the client, only the hybrid “advisor.”

Please understand, an ocean of difference exists between the prudent recommendations of a RIA and the suitable recommendations of a hybrid, fee-based advisor.

The impetus behind the hybrid channel is the broker-dealer. It uses the channel as a flexibility magnet to attract and hold those advisors who do not want to tether to only a broker-dealer or RIA.

I’m not saying they are “bad actors” in an industry already fraught with trust issues; I am saying caveat emptor, buyer beware.

Shelter in a Storm

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You can get out from under the gray cloud of uncertainty. You can adopt certain protective gear. No matter from whom you seek financial advice, ask the following questions and clear the air. If the person at the other end of the question hesitates at all, or succeeds in hedging an answer altogether, he or she likely has a conflict of interest and is not operating in your best interest.

 1. Are you familiar with the Fiduciary Oath from the Committee for the Fiduciary Standard?

If, yes, continue with next question. If no, walk away.

2. Describe for me your Fiduciary Oath and would you sign it for me?
If, yes, continue with next question. If no, walk away.

3. Are you affiliated with a broker-dealer? Or a bank?
If, yes, continue with next question. If no, continue to probe.

4. Can you tell me what to expect from products or services?
Listen very carefully and take notes.

5. Are there any disclosed or non-disclosed benefits or commissions which accrue to you?
Depending on the answer, reconsider working with the advisor to protect your money from fee erosion. Banks and broker-dealers hide fees.

We do not believe your interests should be subordinated to the financial interests of the industry.

We do believe anyone calling himself or herself a financial advisor or consultant should be held the fiduciary standard of conduct.

And, we believe you deserve the tools necessary to distinguish between higher-quality advisors and lower-quality advisors.

This email address is being protected from spambots. You need JavaScript enabled to view it. with a simple “I want the Fiduciary Oath,” and we will send it to you shortly to help you with questioning advisors.

In our next post, I’ll discuss the new Department of Labor Fiduciary Rule which went into partial effect June 9 and its implications for retirement plans and the investment advisory business.

advisor caution

I think about trust every day. How to earn it. How to keep it.

It’s the lifeblood of my business. So, I decided to do a little research. On some level, I already knew what I’m about to share, but it still took my breath away to see it in black and white.

Two-thirds of clients do not trust advisors to act in their best interest, cites The American Association of Individual Investors (AAII) in a June 2016 poll or some 2,000 respondents.

“Sixty-five percent said they ‘mistrust a lot’ or ‘mistrust a little’ when it comes to whether the financial services industry and specifically brokers and financial advisors will do what is in the best interest of clients,” said the AAII. [bolding is my emphasis]

Only 15 percent said they “trust a little,” and only two percent of respondents said they trust the industry a lot. “Perhaps not surprisingly, the vast majority–nearly 83%–feel that their interests are secondary to corporate profits and advisor/broker compensation,” the AAII wrote.

Fotolia 90404208 XSGuava Not Grapes

Public confusion persists over the difference between commission-based brokers (think grapes) and advisors who follow a fiduciary standard of care (think guava). What you need and want is the special flavor and uniqueness of a guava, not a common bunch of grapes.

Of course, many of you are sophisticated clients and know this. I do believe that as your fiduciary, we hold a responsibility to regularly reaffirm our trustworthiness, especially in an industry fraught with bad actors.

When the average consumer hears the words “finance” or “insurance,” they tune out, annoyed by moral failings and outright greed of Wall Street, hedge fund managers, big banks, mortgage lenders, and the Madoffs of the world.

Money is an emotional issue for people, regardless of their level of affluence. Bring it up, and the red blush of vulnerability spreads across their face.

Elite advisors, like ourselves, share a responsibility to turnaround the trust deficit. And I believe strongly that consumers of financial advisory services owe it to themselves to hold their advisors’ feet to the fire. Because growing and protecting assets depends on growing and protecting trust.

Do Certifications Signify Trust?

I can count on one hand the number of “trusted” advisors I know worthy of the name. But then, I am a tough taskmaster on most subjects.

My drive to cultivate trust drove my effort to earn key certifications: Accredited Investment Fiduciary® (AIF) and Certified Plan Fiduciary Advisor (CPFA), and to establish my firm as a Registered Investment Advisor. All these marks signify specialized knowledge of the fiduciary duty and a commitment to promote a culture of fiduciary responsibility and professionalism. But there’s no guarantee even certified advisors will do the right thing. Knowing humanity, I suspect the fiduciary care standard suffers its share of bruising, too.

It is fair to say; trusted advisors are not product salespeople. Even so, your “financial advisor” may not be operating with your best interests at heart. And some 200,000 do business in the United States. 

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That was the finding from a recent report from the Consumer Federation of America, a Washington, D.C.-based consumer advocacy group. The organization looked at 25 major brokerage firms and insurance companies.

The report said while brokerage firms and insurance companies call their professionals "financial advisors," these individuals often are sales representatives who pitch mutual funds, annuities and insurance products.

I am going to offer you some key questions to ask potential advisors in a moment to help you separate the guavas from the grapes. Put me to the test, too.

What Creates Trust

To determine what creates the trust in “trusted” advisor, we need to wade through some pretty deep waters. Opinions on trust are as plentiful as fish in the sea.

The experience of trust is highly subjective; its origin rests in the mind of the client or prospect. It can be quantified, but that’s secondary.

Neuroscience confirms that people buy on emotion and justify with logic. While this finding has a long history and its detractors, I submit the creation of trust parallels the emotion-logic sequence.

Allow me to offer my seven-point list of what (I believe) creates trust, based on thirty years in the business:

Roush’s Top-Seven List

  1. Integrity
    You experience your advisor as ethical, reliable, and trustworthy through his actions. Accountability is at the top of his agenda, alongside transparency and full disclosure.
  2. Expertise
    You know your advisor delivers what’s promised with the knowledge, experience, processes, and people in place. Your advisor is a 3(16), 3(21) or 3(38) fiduciary or brings them into the relationship.
  3. Authenticity
    You feel the passion your advisor holds for his or her profession; you know their values, belief systems, and sense their positive intent. They treat you as an individual instead of a number. And their word is golden.
  4. Chemistry
    You enjoy the working relationship, communication, and effort put forth to understand you and what you care about. The advisor asks probing questions and actively listens to your answers. His sincerity, empathy, and credibility are palpable.
  5. Insight
    Fotolia 57241610 XS 2 You appreciate your advisor’s ability to guide you through complexity, simplifying difficult topics and concepts along the way. You recognize how your advisor helps you uncover the value in his advice and recommendations.
  6. Focus
    You are confident your advisor operates in your sole interest. You will not encounter any unexpected surprises or lapses in service.
  7. Vulnerability
    You know your advisor can admit mistakes. This ability signals vulnerability, which is the gateway to courage, a quality that creates trust and confidence in others. And it develops through self-reflection and personal growth.

Key Questions to Ask Your Advisor

When all is said and done, everything comes down to truth. Will you advisor tell you the objective truth, based on facts, and will he share his truth? Ask these questions of current or prospective advisors:

What are your advisor's core values?
Can he or she recite their values to you with conviction? Or do they value the transaction over the relationship?

How is your advisor compensated?

Get very clear on whether your advisor is fee-based or commission-based. Understand how you pay the fee─ annually, deducted from your assets, or must you write a check each time you meet or speak.

How extensive is your advisor’s expertise, experience, training, and certifications?
Transparency engenders trust. And you can easily check on your advisor’s credentials, claims of expertise, the veracity of advice. Contact FINRA, other clients, do online searches for information.

Can you define the nature of your client service with “above and beyond” examples?
Self-explanatory. However, you want to look for a red-carpet brand or white-glove service that pushes way beyond a once-a-year phone call.

If I check FINRA or ERISA, will I find any instances of non-compliance?
Of course, this inquiry is critical. Nothing short of total compliance can work in our business.

What is your commitment to client education?
Do you understand your plan or investments? If not, it is a red flag. Determine to your satisfaction that your advisor will take the time to explain all aspects of your financial program patiently. You must stay informed and well educated about your money.

Will you sign a “truth commitment” or fiduciary oath for me?
For more information on this fascinating concept, check out Wealth Manager, Paul Merriman’s article on MarketWatch.

The good news? Roush Investment Group is already a 3(21) investment fiduciary.

But that does not mean we sit on our status. Your financial well-being comes first.

You will hear more from us on matters of trust.

In a world of so-called “fake news,” one thing we know with certainty: You can’t fake trust.

The Big Problem No One is Talking About

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Out of 28 million businesses1 in America, roughly 10 million owners plan to sell or close their businesses over the next 10-15 years 2, the majority because they need to fund their retirement.

And nearly 80 percent of these business owners plan to fund 60 to 100 percent of their retirement by selling their business. 

But there’s a big problem no one wants to talk about.

Seventy-two percent, have no exit plan.3

Of the remaining, only half put a strategy in place; the other half are working on a plan.

Find a Sense of Urgency

We understand you’re massively tasked with running your business. And that you get little time off for the luxury of advanced planning. But without an exit plan, you risk losing or devaluing your largest asset.

And it’s not just only about you.

Selling closely held businesses affects tens of millions of people. Small business employs more than 80 percent of all U.S. workers. Those folks may be family members, long-time employees or friends.

Roush Investment Group has always been a crusader for small, mid-size closely held businesses. That’s why we’re here to help you prepare your business exit plan.

Fotolia 106327775 XS This post, the last in a four-part series, looks at how to prepare to sell your business, and what to do even if you don’t want to sell. First, a word about family-owned businesses.

Difference with Family-Owned Business

The majority of family business owners believe their families will control their business in five years, but succession statistics tell us otherwise.

According to The Family Firm Institute 4, only about 30 percent of family-owned businesses survive into the second generation, 12 percent are still viable into the third generation, and only about 3 percent of all family businesses operate into the fourth generation or beyond.

While this is a sad reality, there’s a solution to stem the loss. Business failures happen because of the absence of family business succession planning, supported by an exit strategy plan.

Fotolia 93356253 XS In a recent article in Forbes 5, contributing writer Brent Beshore offers this wake-up call:

“We are in the beginning of a transition within the American economy where more than half of all businesses with employees will need to sell, restructure, or close their doors. The numbers are finite and inescapable. Mortality is a real thing. Liquidity issues and estate taxes don’t take care of themselves. Without a plan, the likely result is a legacy of chaos and confusion.

Whether begrudgingly or willingly, every Baby Boomer owner must confront this question: What will my company look like without me involved, and what process needs to take place to ensure my family’s financial health and the company’s prosperous future?”

Business Exit Planning Process

Exit planning creates and executes on a strategy to enable owners to leave their business interests in their own time and on their terms.

Exit planning is an established process with a written roadmap, involving a team of professionals, led by an exit planning advisor who guides the path to results.

Most entrepreneurs go into business intending to build, sell, and move on. Experts say you should begin planning for your exit the day you open.

You invest decades building and running their businesses. One day, you know you’re done. You want something different out of life, less stressful, perhaps, more meaningful. You simply want to stop grinding it out every day.

Even if selling your business seems far in the distance, at some point, every business owner steps away from command due to:

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  • Retirement
  • Ready to pass it on to children or other family members
  • Ready to sell
  • Faced with health issues limiting the ability to run the business
  • Premature death of owner or business partner

Get the Maximum Value

Your documented exit plan will help you get the maximum value for your business, whatever your goal. Among the personal exit goals we encounter, owners want to:

  • Use the sale of the business to fund retirement
  • Create a business that succeeds for future generations
  • Enjoy more free time and time with the family
  • Travel and see the world
  • Reduce stress and focusing on healthy living

Exit planning may take as little as six months to as many as five years to fully plan and implement an exit strategy, with the average time of two years.

Make sure the business is ready, too. You need the right people and systems in place for a smooth transition and to meet your ideal selling price. Of course, the business needs to showcase solid financials to attract the right buyer.

Prospective buyers will want to know how involved is the owner? If he or she is integral to the success of the business, the buyer will mostly be buying a job. We often see the purchase price based on an earn-out formula requiring the owner to stay on for a few years. If the business can run without you, it will be more valuable to a buyer.

As an owner, you need a strong understanding of the market value of your business. Once you do, you can take strategic measures to increase the market value, where needed.

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Four Steps and the Questions to Ask Yourself 6

Step 1─Exit Objectives

Have you determined your primary planning objectives in leaving the business, such as:

  • Is the business ready to sell? Right time? Is the market right?
  • Your desired departure date?
  • The income you need to achieve financial security?
  • To whom do you sell or leave the business?
  • The value you are seeking? How is a buyer going to value my business?
  • How you plan to treat valued employees once you exit?

Step 2─Valuation and Cash Flow

It’s important to understand how businesses in your industry value themselves and determine price.

  • Do you know what your business is worth?
  • Do you know what the business’s future cash flow is likely to be after you leave it?
  • How do buyers determine price in your industry?

Step 3─Making the Business More Valuable

Increase value by knowing how to find hidden value and account for it in your in planning.

  • Do you know how to increase the value of your ownership interest?
  • Do you know where the hidden value is in your company?
  • Do you know how to pull value out of the business before the sale?

Step 4─Sale or Transfer to Third Parties

  • Who should be on your team when you sell?
  • Is your buyer a strategic or financial buyer? Employees or family members?
  • Can your business survive without you or a key customer?
  • Are you willing to stay on?
  • What are the deal breakers?
  • Would you consider alternatives to an outright sale?

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What You Can Do Right Now

This list is certainly not exhaustive; however, it will help you get started.

Improve Your Financials

  • Review your balance sheet and income statement; clean up your books
  • Know the cost of each component of your product or service
  • Acquisition costs for a new customer/client
  • Rationale behind the pricing strategy
  • Onboarding costs for new hires

If you’re exit planning, consider ways to consistently increase sales and revenue, with special attention to recurring revenue sources to generate gross income for a new owner. Build recurring revenue streams and shore up pending customer or vendor contracts to give buyers the comfort of a consistent revenue flow.

Analyze Your Market

  • Evaluate what external trends may impact the strengths and weaknesses of your business
  • Study market size and competition; pinpoint differentiation
  • Understand your ability to cope with changes on near or long-term horizon

Improve Your Operations

  • Ensure the right management team is in place
  • Document your processes
  • Polish up your facilities

Determine Your Business Worth

  • Be realistic how much your company is worth
  • Do your research; don’t be blindsided
  • Get clear about the hidden value in:
    • Your intellectual property
    • Your employees (retain key talent)
    • Your distribution strategy
  • Consult an investment banker familiar with your market


It’s time to decide. Once you’re ready to do a business exit plan, contact us.

We’ll share a list of documents you need; then we’ll sit down together, review your goals, and set up a course of action. We’ll do the worry and work, so you don’t have to.

1 U.S. Small Business Administration,
2, April 13, 2015, “Small Biz Owners Ignoring Succession Advice” by Lori Ioannou, senior editor
3 Securian Financial Group survey, February 18, 2014, “Small Business Owners Plan to Exit Soon, But Have No Exit Plans,” and 2015 Small Business Owner Life Stage Study.
4 Family Business Institute, website
5 Forbes, October 11, 2015, “Why Small Businesses Are Feeling An Economic Crunch,”
6 Some questions drawn from Entrepreneur Magazine, March 6, 2013, “10 Questions to Ask Before Selling Your Business,” by Lisa Girard.

If we can be of service, please contact me below.

rick roush

Rick Roush AIF®, CPFA

Roush Investment Group

O: 559.579.1490 F: (559) 490-2015 C: (559) 285-3318